26 Feb 2013
The FNB report on emigration and foreign buying reveals that the propensity to emigrate among skilled South Africans is traditionally high, and this impact on the property market thus has the potential to be significant.
The 2008 “spike” in emigration-related selling at around the time of the Eskom “crisis”, at 20 percent of total selling, reflects this propensity.
Writing in the report, FNB household sector and property strategist John Loos explains that the percentage of sellers selling in order to emigrate dropped even further from 4 percent of total sellers in the Q2 to 3 percent in Q3 and Q4, the lowest emigration selling percentages estimated since the start of this survey question at the beginning of 2008.
For 2012 as a whole, average emigration-related home selling was estimated at 3.4 percent of total selling down from 4.1 percent in 2011.
Loos points out that the weak global economic times probably masks any changes in sentiment towards South Africa, because even if a heightened number of domestic homeowners were feeling a desire to emigrate in recent times, job prospects in some of the traditionally popular emigration destinations are far from rosy, especially European destinations.
With regard to foreign buyers, the second quarter moving average for the fourth quarter actually showed some improvement from 3 percent of total buyers of local residential property to 3.5 percent, he says.
“While this remains far from the highs of 6.5 percent back in 2008, it is a little better than the 2 percent low reached in late-2010.”
For 2012 as a whole, the average foreign buying estimate was 3.8 percent of total buying, up from 2011’s estimated 3 percent.
Loos points out that financial times in economies such as Europe and the UK, from where a significant portion of SA’s foreign buyers come, are currently tough, and that could conceivably be putting pressure on foreign buying, so improvements in this source of residential demand have been slow.
Estate agents surveyed reveal that one group which doesn’t appear to be affected by recent tensions is foreign buyers from African countries.
Expressed as a percentage of total foreign buyers, the African contingent has increased further to 22 percent for the second quarter to the fourth quarter of 2012.
This continues an upward trend in this percentage from a low of 8.5 percent back in Q3 2010.
“Looking longer term, I believe that South Africa is likely to see further increase in the African foreign buyer percentage, as Africa’s economic fortunes continue to improve and its household wealth grows too.”
Loos says with regard to emigration selling of local property they do not appear to be seeing any negative impact (increase) from recently heightened domestic tensions.
But it is important to understand that our “brain drain” problem has probably not permanently subsided.
In different (better) global economic times, the negative impact may have been far more significant, as was the case in pre-recession early-2008 during the Eskom load shedding period, when many feared that the “lights were going out”, he adds. – Denise Mhlanga
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